Extraordinary acquirers

Abstract

Firm fixed effects alone explain as much of the variation in acquirer returns as all the firm-and deal-specific characteristics combined. An interquartile range of acquirer fixed effects is over 6%, comparable to the interquartile range of acquirer returns. Acquirer returns persist over time, but mainly at the top end of the distribution. Persistence continues under different chief executive officers (CEOs), and attributes of the broader management team do not explain the fixed effect. Firm-specific heterogeneity in acquirer returns suggests that some organizations are extraordinary acquirers irrespective of the leadership at the top and the deal structures they choose. Implications for the M&A research are discussed.

The Full Stock Payment Marginalization in M&A Transactions

“…The set of control variables is the same as in Table 9. Method of payment, pooling abolishment, and value effects: U.S. case Table 9 reports the results of cross-sectional regressions of acquirer CAR on a large set of determinants classically used in prior literature (Golubov et al 2015), dummy variables identifying the post-pooling abolishment period (Postpool), fully stock paid acquisitions (Stock), public targets (Public Target), and their interactions. The M&A sample for the U.S. is introduced in Table 1, and the variables are defined in Appendix 1.…”

“…The acquirer CAR are for a three-day event window, centered on the announcement date. We then regressed acquirer CAR on the set of classical determinants (Golubov et al 2015) and dummy variables that capture the post pooling period (Post pool), the target's status (public target), and full stock payment (stock). observe that acquiring public targets is negatively perceived by investors, and the effect is reinforced by full stock payments.…”

Research on Persistence of Frequent Acquirers’ Returns and Its Affected Factors

“…In order to have a better understanding of persistence of acquirer returns, OLS method is used to regress historic performance and future performance of Q 1 It shows that α 1 of Q 1 group in frequent acquirer sample are positive and significant except when t value 1. The exception can be explained as few deals are conducted within only one year.…”

Management as the Sine Qua Non for M&A Success

“…The main reason is that M&A success relies on variables that, by their own nature, relate to the acquirer's management practices (Golubov et al, 2015), which are either entirely unobserved to researchers or difficult to measure. In this study, we examine management practices among the executive and top management teams of acquirers (entrepreneurship, skill, ability, etc.).…”

“…M&As (e.g., Bao and Edmans, 2011;Golubov et al, 2015), with the exception that we add our management index. Our results are striking, showing that our index is economically the most significant explanatory variable of CARs.…”